Date posted: 20/05/2020 8 min read

The pros and pitfalls of online shopping

The upward trajectory of online shopping seems unstoppable. Sure, it’s convenient, but at what cost to the planet?

In Brief

  • The value of the online goods market is predicted to grow to US$3.43 trillion by 2023.
  • The packaging and fuel used to deliver these goods is adversely affecting the environment.
  • Retailers are trying a number of sustainable initiatives to reduce their carbon footprint.

By Amity Delaney

Even before COVID-19 kept so many of us indoors in our pyjamas, the global online goods market was forecast to reach US$3.43 trillion by 2023. Recent Australia Post research showed online shopping in Australia accounted for 10% of total retail spending, while New Zealanders spent NZ$4.2 billion online in 2018, according to a NZ Post report.

But coronavirus lockdowns supercharged online shopping. In the last week of March and first week of April 2020, Australia Post had a 50% lift in its parcel deliveries. Wine, electrical appliances, groceries, clothing and footwear headed the list of Australians’ lockdown must-haves, according to a 7News report.

In New Zealand, the online shopping bump came in early May, when the nation moved from level four to the less restrictive level three lockdown. The New Zealand Herald reported that NZ Post was receiving 200 parcels every minute.

However, the convenience of online shopping comes with baggage: the excessive packaging on products and the emissions caused by delivery vehicles are having a huge environmental impact.

Sources: Australia Post 2019 eCommerce Industry Report; NZ Post 2019 eCommerce Review; “Australia Post sees surge in online orders as the country bunkers down during coronavirus lockdown”, 7News.com.au, 3 April 2020; “Covid 19 coronavirus: NZ Post working around the clock to deliver thousands of parcels”, nzherald.co.nz, 12 May 2020.

Year-on-year growth from 2017 to 2018Graphic: Year-on-year growth from 2017 to 2018 (click image to enlarge). Source: Australia Post 2019 eCommerce Industry Report.

Lower foot traffic = higher carbon footprint

Online shopping uses immense amounts of packaging. Greenpeace has reported that the top seven British grocery retailers are putting 59 billion pieces of plastic packaging into circulation.

The extra transport required to deliver products purchased online contributes to rising emissions. This is especially the case during the “last mile” for deliveries, during which the most carbon emissions are produced.

The rising demand for same-day and next-day deliveries is also forcing online retailers to hold more stock, which in turn contributes to a higher rate of waste. This is a particular problem for the supermarket industry.

E-commerce also has high return rates, contributing to a larger carbon footprint. According to data from Statista, e-commerce returns in the US alone will cost US$550 billion in 2020. It is also important to note that shopping online does not negate a shopper’s journey to the shops as most people do a bit of both.

Source: Australia Post 2019 eCommerce Industry Report

 Reasons consumers shop online instead of in storesGraphic: Reasons consumers shop online instead of in stores (click image to enlarge). Source: KPMG Consumer Attitudes and Motivations.

Sustainable solutions for packaging and delivery

A number of sustainable initiatives are being implemented by retailers to reduce their carbon footprint.

UPSNav, a delivery algorithm tool used by American package delivery company UPS, optimises routes for drivers by working out the most energy efficient route for deliveries.

In 2019 Etsy became the first global e-commerce company to completely offset all emissions produced through shipping by funding renewable projects such as forest protection, solar and wind farms.

French start-up Living Packets has developed a reusable, sustainable and trackable shipping box that produces close to zero waste and uses technology to eliminate the need for materials such as bubble wrap and packaging stickers.

Other companies making sustainable and compostable packaging include BioPak (Australia) and The Better Packaging Co., a New Zealand company that makes worm-friendly compostable packaging from corn and non-toxic resin.

Second-hand is a fast-growing trend

With research showing 90% of Australian and 87% of New Zealand consumers are concerned about making sustainable choices – and Google searches for sustainable fashion increasing by 662% in the past decade, according to Love the Sales – we may see more considered purchasing in the future. New York University professor of marketing Scott Galloway predicted at the INFORM News Media Summit in 2019 that global sales of used clothing will be “a bigger business within nine years than fast fashion”.

11 facts you probably didn’t know about online shopping

  •  73% of Australians shopped online in 2018.
  • A$27.5 billion was the total e-commerce revenue in Australia in 2019.
  • 32% of consumers shop online from 7-10pm.
  • Tuesday is when shoppers’ fingers are doing the most clicking in New Zealand.
  • 27% of online purchases in Australia are in the fashion category, while 31% of all online spend in New Zealand is in the department and variety sectors.
  • 16% is the percentage that total online retail spend in New Zealand grew from 2017 to 2018.
  • 28.8% is the percentage that smartphone transactions grew in Australia from 2018 to 2019.
  • 34% is the percentage that online purchases of baby products grew in Australia from 2018 to 2019.
  • More than 5 million Australians are considering purchasing their groceries online in 2020.
  • 57% of shoppers globally will cancel orders if shipping costs are too high.
  • 39% of customers globally will abandon the shopping cart if free shipping isn’t offered.

Sources: NZ Post 2019 eCommerce Review; Australia Post 2019 eCommerce Industry Report; Roy Morgan; Shopify Global Ecommerce Playbook.

The top 10 e-commerce markets

1. China

2. United States

3. United Kingdom

4. Japan

5. Germany

6. South Korea

7. France

8. Canada

9. Australia

10. Russia

Source: Shopify Global e-commerce Playbook.

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